The recently concluded UP Investors Summit 2018 seems to have turned out to be a huge bonanza for the Uttar Pradesh’s textile and garment manufacturing industry. Not only has the state has been able to attract investments to the tune of Rs. 7,000 crores in the textile space, it may soon also get a ‘Yarn depot’ that will further help in strengthening the local textile industry.
Speaking at the summit, Union Minister for Textiles Smriti Irani announced that she would pursue with Centre to collaborate with the UP Government to establish a yarn depot in the state. “I propose to the State Government that a yarn depot be set up in UP through which weavers can directly purchase yarn at subsidised rates,” Irani said.
Underscoring that for last many years the Government has been extending 10 per cent subvention on the purchase of 4 kg silk and 40 kg of cotton to the weavers, Irani, however, also pointed out that the benefits of subsidy barely reached the target beneficiaries.
Dubbing textile industry as UP’s growth engine, the Minster also noted that the yarn depot could also encourage enhanced production.
Noticeably, yarn, the main raw material used in handloom sector, is produced by spinning mills.
Earlier, the yarn trade was controlled by traders that resulted in and unrestrained upsurge in yarn prices and the shortage of supplies.
In the year 1983, the Government of India (GoI) introduced National Handloom Development Corporation (NHDC) Ltd., the national level apex body, to regulate the availability of yarn of the appropriate and requisite quality to weavers across the country through an organised system.
However, the transportation of yarn from one place to another escalates the cost of yarn substantially, which is unfavourable to weavers. To overcome this issue, the Government brought the Mill Gate Price Scheme (MGPS) for ‘Supply of yarn’ at the price in which it is available at the Mill Gate in 1992.
Under the scheme, the freight expenses incurred in the supply of yarn are reimbursed by GoI, while NHDC is the nodal agency for implementation of the scheme. ‘Yarn Depot’ is another important feature of this scheme, which is now called Yarn Supply Scheme (YSS).
Handloom weavers located in remote, interior and far off places have been regularly facing problems in the timely supplies of yarn. The Government encourages various agencies to operate depots on a continuous basis and permits all categories of yarn (i.e. yarn procured under YSS and also yarn procured directly by the agencies) to be supplied via yarn depot.
However, the value and quantum of yarn supplied by NHDC under YSS only shall be considered for compensation of depot operating charges.